The rate of inflation has been termed to be directly proportionate to economic activity, with the increase in economic activity leading to higher levels of inflation. Central Banks have used this relationship to formulate interest rates and understand the inflation–unemployment dynamics in many countries. Dr Adviti Devaguptapu, Assistant Professor from the Department of Economics, has published an interesting study in her paper titled “Phillips Curve in Canada: A Tale of Import Tariff and Global Value Chain”, where she examines the relationship between inflation-economic activity in Canada to better understand the correlation between inflation and unemployment rates.

Abstract

The paper examines the Phillips curve for Canada from June 1976 to October 2022 in a time-varying manner. The findings reveal that the impulse response of inflation to the changes in the unemployment rate gap has reduced over time till 2010 and strengthened thereafter. The response of inflation to the changes in the unemployment rate gap has increased in short and medium horizons after 2010. On further examination, it is found that the changes in both average import tariff and forward participation in the global value chain have reduced the inflation response to the changes in the unemployment rate gap.

Social Implications of the Research

Inflation-targeting central banks should have to put more (less) effort into achieving price stability in the medium run when the change in the level of inflation to the changes in the unemployment rate gap is more (less).

Dr Adviti’s research works towards developing quality-adjusted inflation in India – the need for it and the challenges in recording it.

Link to the article

Heat stress negatively affects crop yield and its impact has increased over time. Researchers in India study this situation with utmost priority. Consequently, Dr Ghanshyam Kumar Pandey, Assistant Professor in the Department of Economics at SRM University-AP has co-authored a paper with Pratap S Birthal and et. al titled “Benefits of irrigation against heat stress in agriculture: Evidence from wheat crop in India” in the journal Agricultural Water Management, Vol 255, having an Impact factor 4.02.

Applying the fixed effects regression technique to the highly spatially disaggregated district-level data from 1966–67 to 2011–12. This paper has assessed the impact of heat stress on wheat production in India and concurrently evaluated the role of irrigation in offsetting its harmful impact. The study has brought out three key highlights:

(i) Heat stress negatively impacts crop yield, and the impact has increased over time.
(ii) Irrigation, besides its contribution towards improving crop yield, also moderates the harmful impact of heat stress, but over time its effectiveness has declined.
(iii) The measure of heat stress built on multiple aspects of excess temperature (i.e., intensity, persistence, and frequency) explains variation in crop yield better than working on a single aspect of it.

Given the increasing scarcity of irrigation water and rising temperature, these findings suggest the need for exploring technological and policy options for improving irrigation water use, efficiency, and breeding of crops for heat tolerance and low water footprints.

This research paper is written in collaboration with ICAR-National Institute of Agricultural Economics and Policy Research, PUSA, New Delhi. Dr Ghanshyam’s future projects are focused on climate change and agriculture, and the effect of climate change on the livestock sector in India.

Read the full paper here: https://doi.org/10.1016/j.agwat.2021.106950

Dr Balaga Mohana Rao, Assistant Professor from the Department of Economics has been awarded the best PhD thesis award in the 59th IIT Bombay convocation held on August 07, 2021. The thesis titled The Early Warnings of the Impending Currency Crises and the Ensuing Macroeconomic Costs aims to develop an Early Warning System to identify the Currency Crises that would help in preventing an impending crisis and also in mitigating the devastating aftermath effects if that occurred.

The financial crises have enthused a huge theoretical and empirical debate in current times due to their recurrent nature in the history of economics. To highlight the importance of an economic crisis among various sections, Kaminsky et al. (1998) quote Kindleberger (1978) saying that academics are interested in a crisis as they have had a history of fascination for the crises, policymakers are interested because they want to prevent the crisis, and financial market participants are interested as they can make money out of it. The financial crises can be divided into two broad categories—currency and sudden stop crises, and debt and banking crises. The currency crises have not only swept away Argentina (2001), Brazil (1998–1999), Latin America (the 1980s), Russia (1998), Southeast Asia (1997) and UK (1992) (to name a few) but they also have caused serious economic adversities to India and BRICS in the recent past. A currency crisis encompasses one of the following four features or a combination of them owing to a speculative attack—both successful and unsuccessful attacks—on a currency: A sharp depreciation of a currency (possibly followed by devaluation) and/or huge depletion of foreign exchange reserves or an increase in interest rates by the central bank or imposing restrictions on capital flows. In this context, Dr Balaga Mohana Rao’s thesis focuses on developing an early warning system to identify the impending crises, finding the common determinants of currency crises and the aftermath effects on macroeconomic indicators.

“One may wonder why the crisis should be prevented or mitigated. The reason is that a full-blown crisis will not be just confined to the foreign exchange market or some other segment, but it will affect the whole economy” Dr Balaga said. He plans to extend his PhD work on Currency Crises and see it in the context of the International Price System.

Dr Ghanshyam Pandey, Assistant Professor of Economics, SRM University – AP has been appointed as an expert for agriculture, rural development, livelihood issues, and climate change and agriculture by The Centre of Integrated Rural Development for Asia and Pacific (CRIDAP). CRIDAP is an intergovernmental and autonomous organization and has 15 member countries. The member countries are Afghanistan, Bangladesh, Fiji, India, Indonesia, Iran, Lao PDR, Malaysia, Myanmar, Nepal, Pakistan, Philippines, Sri Lanka, Thailand, and Vietnam. His tenure of appointment will be up to 2024.

Dr Ghanshyam Pandey’s role in the organisation:

• CIRDAP resource person to participate in project proposal development and consultancy.
• CIRDAP resource person for flagship training courses.
• Reviewer of Asia-Pacific Journal on Rural Development (APJORD).
• Part of CIRDAP Think Tank for knowledge sharing and solutions to IRD and PA.
• To expand CIRDAP Think Tank Networks.
• To advise on refining CIRDAP Strategic Plan 2020-2024.

About the organisation:
The Centre on Integrated Rural Development for Asia and the Pacific (CIRDAP) is a regional, intergovernmental and autonomous organisation. It was established on 6 July 1979 at the initiative of the countries of the Asia-Pacific region and the Food and Agriculture Organization (FAO) of the United Nations with support from several other UN bodies and donors. The Centre came into being to meet the felt needs of the developing countries at that time as an institution for promoting integrated rural development in the region. From the original six members, CIRDAP has now grown up as a Centre of 15 member countries. The member countries are Afghanistan, Bangladesh (Host State), Fiji, India, Indonesia, Iran, Lao PDR, Malaysia, Myanmar, Nepal, Pakistan, Philippines, Sri Lanka, Thailand and Vietnam. Operating through designated contact ministries and link institutions in member countries, CIRDAP promotes regional cooperation. It plays a supplementary and reinforcing role in supporting and furthering the effectiveness of integrated rural development programmes in Asia and the Pacific.